Socio-economic analysis of GMO

In Italy, and in other European Union countries, agriculture has functions which are more than the simple production of food or raw materials. Agriculture has a role of fundamental importance for the protection and maintenance of the territory, for landscape conservation and protection (hedges, dry-stone walls, olives, citrus fruit, special rows of trees, etc.), for the protection of flora and fauna, for the preservation of biodiversity, for the creation of areas for recreation, for the preservation of the traditional culture of rural territory, and for the mitigation of the negative consequences on the environment, caused by other production and consumption activities.

    Let’s suppose for a moment that our country could do without agriculture for food production: could it also do without agriculture for territory protection? The answer is certainly in the negative, since the presence of agriculture in a territory managed like ours is synonymous with “safety and protection of the environment”. Our society must therefore adopt agrarian policies capable of protecting the farmer’s income, in order to guarantee him those indispensable rewards that will make him remain on the land.

    Unfortunately, the existing transgenic organisms will not guarantee a higher income for the producer, because in agriculture, as is well known, a cut in production costs corresponds, in the long run, to a fall in products’ sale prices, thus annulling the profits (it should be pointed out that a price fall would also imply a real income loss for the  producer: non-agricultural products would cost more in terms of agricultural products).

    The producer’s reduced income is also a consequence of the fact that GMO (= Genetically Modified Organisms) substantially neutralise the production factors directly introduced by the entrepreneur. At the same time, GMO require a major input of external factors of industrial origin, that must be acquired on the market.

    The increase in producer’s income could come from a differentiation of products towards those with an added value (food with more proteins, more vitamins, fewer calories, parthenocarpy, etc.). However, these earning opportunities can come about only if the market is “free”. If  production is carried out “on contract” – which is more likely -  the profit increase would favour almost exclusively the patent holder of the transgenic plant.

    From a first appraisal,  it can be asserted that existing transgenic crops are the first step towards a complete automation of the process of production (precision farming, almost impossible to realise on Italian territory) and towards a standardisation of food production. Production will be controlled by satellites, will not need the farmer and will determine an increase in the return on capital to the detriment of returns destined to the remuneration of other productive factors. It is in this context, among other things, that the premises are created for a shift in control of rural territory, from the farmer (no longer able to obtain an income from his own production factors) to individuals that have nothing to do with agricultural activity, who with their own capital or with capital of third parties will be able to take over not only cultivation but also farm property.

     For a “sustainable development” of our agriculture, the laws regarding the patenting of transgenic products will then have to be revised. It is not acceptable that he who inserted a gene in a plant therefore acquires the right for the “de facto monopoly” on that plant, thus preventing its free cultivation. This assertion is supported by the consideration  that, the moment  when the transgenic plant is considered equal to the “non-transgenic” and the farmers start growing it, even those farmers who initially did not intend to cultivate it will be forced to do so. This is due to the fact that they will have to operate in a market where the price of that product will be in proportion to the (lower) production costs of the transgenic plant. Therefore, if growers want to remain competitive in the market, they will have to change their production to transgenic. In this way a de facto monopoly for the market of the seeds of that plant could be created.

    In  this context we may place the misgivings expressed by some about the relation between “agriculture and the lords of the genes”, or rather between the farmers and the “owners” of the genetic material from which that same product originates. How can this patent be exploited? Are there any limits to the economic exploitation of the invention, or is everything permitted to the patent holder?

    Undoubtedly, these questions need definite answers about the possible consequences on the agricultural sector of the patent’s exploitation. We might even think of a situation in which the farmer does not buy the seed himself, but he receives it from the same company that owns the patent and will also own the final product. Production will be carried out by the grower on the basis of an “agreement” prescribing pesticides to be used, agricultural operations to carry out and everything  else necessary for the final product . For his work, the farmer will receive a lump-sum remuneration embracing his labour and the use of special equipment. In such a situation, the grower is relieved  of  most of the business risks, but at the same time he becomes a supplier of labour and capital, to the advantage of the integrating company, which remains the owner of the seed and the final product. Obviously, in a market economy, the grower’s remuneration for a production on commission would be subject to the law of supply and demand. So what will happen when the company that owns the seed finds a grower able to provide the same services at a lower cost, or when it finds another country with more favourable production costs? Obviously, other conditions being equal and operating on a global scale, it will move its production to where it costs less.

     In a not too distant future, our products will have to face competition with products from countries with much lower production costs, from countries where the use of certain chemicals (either fertilisers or pesticides) is not regulated, from countries where child labour, far from being eliminated, is enforced and exploited, from countries not able to guarantee the genetic material from which the product is derived. This list could go on. That is why in the next few years the problems related to national agriculture may, very probably, stem from market globalisation and from the subsequent setting up of a huge world-wide market of food products, where the absolute rule will be producing more (it doesn’t matter how) at the lowest possible cost.

    Nevertheless, in this context some questions must be asked: are low costs and market globalisation compatible with the quality of production which we all wish for?  Do they assure an income for agricultural producers from areas that are at a “disadvantage” as far as production factors’ costs are concerned? Are they compatible with the sustainable development of the territory? Can they preserve the cultural, economic, social and professional  identity of a territory?

    These questions must have definite answers in order to verify if, over a long period,  the transgenic organisms and the subsequent process of market globalisation represent an opportunity for our country agriculture or rather a dangerous path that could bring harmful effects on the well-being of our society.